CHAPTER 2

Strategic Planning

PRINCIPLES OF MARKETING

Chapter 2
Strategic
Planning

2.1 Steps in Strategic Planning

2.1.1 BCG Growth-Share Matrix
2.1.2 Product/Market Expansion Grid

LESSON OUTCOMES

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Strategic Planning

ROLEX: BUILDING BRAND EQUITY

THROUGH A CUSTOMER-DRIVEN
MARKETING MIX
“Rolex has established and maintained its
pole position as the largest luxury watch
brand on the planet. At its core, Rolex
doesn’t sell just wristwatches, it sells a
sentiment of achievement and belonging to
an exclusive club.”

Strategic
planning is the
process of
developing and
maintaining a
strategic fit
between the
organization’s
goals and
capabilities, and
its changing
marketing
INTRODUCTION opportunities.

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INTRODUCTION
▪ Strategic planning sets the
stage for the rest of the
planning in the firm.
▪ Companies usually prepare
annual plans, long-range plans,
and strategic plans.
▪ The annual and long-range
plans deal with the company’s
current businesses and how to
keep them going.

STEPS IN STRATEGIC Figure 2.1 Steps in

PLANNING Strategic Planning

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 CHAPTER 2
Strategic Planning

STEP 1: DEFINING A MARKET –ORIENTED

MISSION
▪ An organization exists to
accomplish something, the
purpose should be clearly
stated.
▪ Many organizations develop
formal mission statements.
▪ The mission statement is the
organization’s purpose; what CVS Health’s overall mission is to be a
“pharmacy innovation company,” one
it wants to accomplish in the that is “helping people on their way to
larger environment. better health.” Its marketing strategies
and programs must support this mission.

STEP 2: SETTING COMPANY OBJECTIVES AND

GOALS
The company’s mission needs to be turned into detailed
supporting objectives for each level of management.

The mission leads to a hierarchy of objectives, including

business objectives and marketing objectives.

Build profitable customer relationships

Business objectives Invest in research
Improve profits

Increase market share

Marketing objectives Create local partnerships
Increase promotion

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STEP 2: SETTING COMPANY OBJECTIVES AND

GOALS
Product- versus Market-Oriented Business Definitions
Company Product-Oriented Definition Market-Oriented Definition

Starbucks We sell coffee and snacks. We sell “The Starbucks

Experience,” one that enriches
people’s lives in one moment,
one human being, one
extraordinary cup of coffee at
a time.
Panera We sell fast-casual food in our We give customers “Food as it
restaurants. should be”: food that tastes
good; food that feels good;
food that does good things for
them and the world around
them.

EXAMPLE: AIRBNB’S MISSION

Belong
Anywhere–Don’t
Stay There. Live
There.

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Strategic Planning

STEP 3: DESIGNING THE BUSINESS PORTFOLIO

▪ The best business portfolio is the one that best fits the
company’s strengths and weaknesses to opportunities
in the environment.
▪ The business portfolio is the collection of businesses
and products that make up the company.
▪ Business portfolio planning involves 2 steps;
Step 1: Analyze current business portfolio
Step 2: Develop strategies for growth and downsizing

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BUSINESS The major activity in strategic planning is

business portfolio analysis.

PORTFOLIO
PLANNING Portfolio analysis is a major activity in
strategic planning whereby management
evaluates the products and businesses

STEP 1: that make up the company.

ANALYZING Management’s first step is to identify the

key businesses that make up the

THE CURRENT company is called the strategic business

units (SBUs).

BUSINESS Company division

PORTFOLIO Strategic business

units can be a
Product line within
a division
Single product or
brand

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BUSINESS PORTFOLIO
PLANNING
STEP 1: ANALYZING THE
CURRENT BUSINESS PORTFOLIO

▪ The best-known portfolio-planning

method was developed by the
Boston Consulting Group.
▪ This matrix defines four types of
SBUs:
▪ Stars: high-growth market, high-
share product
▪ Cash cows: low-growth market,
high-share product
▪ Question marks: low-share
product, high-growth market
▪ Dogs: low-share product, low-
growth market

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BUSINESS PORTFOLIO PLANNING

STEP 1: ANALYZING THE CURRENT Figure 2.2 The BCG
Growth-Share Matrix
BUSINESS PORTFOLIO

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BUSINESS PORTFOLIO PLANNING

STEP 1: ANALYZING THE CURRENT BUSINESS
PORTFOLIO
Problems with Matrix Approaches

❑Difficulty in defining S B U s and measuring market share and

growth
❑ Time-consuming
❑Expensive
❑Focus on current businesses, not future planning

Over the years, ESPN has grown to become a

huge and complex brand portfolio consisting of
more than 50 different entities.

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RECAP ON BCG MATRIX

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BUSINESS PORTFOLIO PLANNING

STEP 2: DEVELOPING STRATEGIES
FOR GROWTH AND DOWNSIZING

▪ Designing the business portfolio

involves finding businesses and
products the company should consider
in the future.
▪ Marketing has the main responsibility
for achieving profitable growth for the
company. Marketing needs to identify,
evaluate, and select market
opportunities and establish strategies
for capturing them
▪ One useful device for identifying
growth opportunities is the
product/market expansion grid.
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BUSINESS PORTFOLIO PLANNING Figure 2.3 The

STEP 2: DEVELOPING STRATEGIES FOR Product/Market
Expansion Grid
GROWTH AND DOWNSIZING

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BUSINESS PORTFOLIO PLANNING

STEP 2: DEVELOPING STRATEGIES FOR GROWTH AND
DOWNSIZING
▪ • Market penetration involves making more sales to current customers without
changing the product.
▪ • Market development involves identifying and developing new markets for its
current products.
▪ • Product development involves offering modified or new products to current
markets.
▪ • Diversification involves a company starting up or buying businesses outside of
its current products and markets.

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BUSINESS PORTFOLIO PLANNING

STEP 2: DEVELOPING STRATEGIES FOR GROWTH
AND DOWNSIZING

Developing Strategies for Growth and Downsizing

Strategies for growth:

To maintain its
incredible growth,
Starbucks has brewed
up an ambitious,
multipronged growth
strategy.

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BUSINESS PORTFOLIO PLANNING

STEP 2: DEVELOPING STRATEGIES FOR
GROWTH AND DOWNSIZING

Companies must also develop

strategies for downsizing
their businesses. The company
must carefully prune, harvest,
or divest brands or businesses
that no longer fit its overall
strategy or are unprofitable.
Downsizing is when a
company must prune, harvest,
or divest businesses that are
unprofitable or that no longer
fit the strategy.

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STEP 4: PLANNING MARKETING AND OTHER

FUNCTIONAL STRATEGIES
MARKETING STRATEGY AND THE MARKETING MIX

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STEP 4: PLANNING MARKETING AND OTHER

FUNCTIONAL STRATEGIES
MARKETING STRATEGY AND THE MARKETING
MIX
❑ Marketing strategy is the marketing logic by which the
company hopes to create customer value and achieve
profitable customer relationships.
❑ Marketing strategy involves deciding which customers the firm
will serve (segmentation and targeting) and how (differentiation
and positioning). It identifies the total market and then divides it
into smaller segments, selects the most promising segments, and
focuses on serving and satisfying the customers in these
segments.

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STEP 4: PLANNING MARKETING AND OTHER

FUNCTIONAL STRATEGIES
MARKETING STRATEGY AND THE MARKETING
MIX

❑ Market segmentation is the division of a market into

distinct groups of buyers who have different needs,
characteristics, or behaviors and who might require
separate products or marketing mixes.
❑ Market segment is a group of consumers who respond
in a similar way to a given set of marketing efforts.

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STEP 4: PLANNING MARKETING AND OTHER

FUNCTIONAL STRATEGIES
MARKETING STRATEGY AND THE MARKETING
MIX
Developing an Integrated Marketing Mix
Marketing mix is the
set of controllable,
tactical marketing
tools—product, price,
place, and promotion—
that the firm blends to
produce the response it
wants in the target
market.

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STEP 4: PLANNING MARKETING AND OTHER

FUNCTIONAL STRATEGIES
MARKETING STRATEGY AND THE MARKETING MIX
Figure 2.5 The Four Ps of the Marketing Mix

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STEP 4: PLANNING MARKETING AND OTHER

FUNCTIONAL STRATEGIES
MARKETING STRATEGY AND THE MARKETING
MIX
Figure 2.6 Manging Marketing: Analysis, Planning, Implementation,
and Control

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STEP 4: PLANNING MARKETING AND OTHER

FUNCTIONAL STRATEGIES
MARKETING STRATEGY AND THE MARKETING
MIX
Figure 2.7 SW OT Analysis: Strengths (S), Weaknesses (W),
Opportunities (O), and Threats (T)

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STEP 4: PLANNING MARKETING AND OTHER

FUNCTIONAL STRATEGIES
MARKETING STRATEGY AND THE MARKETING
MIX

Market Planning—Parts of a Marketing Plan

Executive Marketing Threats and Objectives

summary situation opportunities and issues

Marketing Action Budgets Controls

strategy programs

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